I do not actually know what the Basel Committee is. So I read about it: the Basel committee is a standards body for banking. Individual countries adopt standards promulgated by the Basel Committee and enforce them through local laws and regulations.

So when the Basel Committee recently put Bitcoin in its most risky category of assets for banks to hold, it means most of the world's banks are going to have to hold more reserve capital if they want to hold Bitcoin.

A 1,250% risk weight, multiplied by the 8% minimum capital ratio, produces a capital requirement equal to 100% of the exposure: dollar for dollar. With buffers and internal targets, the effective requirement exceeds the exposure. A bank holding $100 million in Bitcoin must allocate $100 million or more in capital against a position that generates no yield. Under any reasonable hurdle rate, this is functionally equivalent to a capital deduction: the business case for regulated-bank Bitcoin intermediation is dramatically harmed, if not eliminated entirely.

The way they are treating Bitcoin is...different:

The Bitcoin Policy Institute recommends three reforms for the Basel Institute:

Immediate — clarify that pure agency custody is capitalized under the operational risk framework and provide a supervisory pathway for limited Bitcoin intermediation.

Medium-term — replace the fixed 1,250% default with a conservative FRTB-based market-risk approach plus operational-risk add-ons, and substitute graduated concentration limits for the binary 2% cliff.

Long-term — create a "non-issuer digital commodity" category with capital determined by measurable risk dimensions rather than technology labels.